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What Is the Importance of Cost Accounting?

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What is the Importance of Cost Accounting?
ACC310: Cost Accounting I (BBJ1220A)
Instructor: Ashley Harper
Melissa Little
June 18, 2012

This paper seeks to explain the practices and principles of cost accounting and their overall effectiveness in assisting a company in minimizing costs where possible and optimizing the return on the costs that are necessary.
Every year, no matter the overall state of the economy, businesses both old and new experience huge successes and huge failures. Every business has the potential and the intention to capitalize on profits and to become perpetually successful. What is the difference between the businesses that are able to do this and those that fail? What do successful businesses do to capitalize on and expand their profits? Many things contribute to successful business enterprises, but the bedrock principle of every successful business venture is honest accounting practices. Accounting is the information system which assesses an organization’s undertakings, computes the figures into reports, and imparts the outcome to an influencer. Accounting is a general, all-encompassing term that can mean many things to many people, so there are a few sub-categories that have been created to delineate specific areas or specialties within the accounting world itself. These are the areas of management accounting and cost accounting. Management accounting refers to the practice of gathering and analyzing accounting information in order to better accomplish the businesses objectives. Cost accounting is an offshoot of management accounting that focuses on optimizing the costs of doing business in such a way that the necessary expenditures of a business can be made to positively affect the company’s bottom line. The basic rationale of financial accounting is to supply creditors with information about a

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